Offset Mortgage

This can be a great mortgage if you have savings that you want to  have access to and do not want to commit to your mortgage or receive large payments such as dividends or bonuses. In return for not receiving any interest on their savings, the homeowner pays a lower rate of interest on their mortgage: an arrangement known as ‘offsetting’. An Offset mortgage is only available where both the mortgage account and the savings account/accounts are with the same provider.

Homeowners can use an Offset Mortgage to either shorten the term of their mortgage, or reduce the monthly repayments.

Another aspect of an Offset Mortgage relates to income tax. In addition to reducing the interest on their mortgage, the homeowner might pay less income tax simply because their savings are not earning any interest.